With Loyalty Programs, Experience is Everything

Payments Leader

Posted on August 29, 2013

Today’s savvy consumers are rebutting incentives that traditionally lured them to customer loyalty programs, as rewards have not only become increasingly harder to acquire or achieve, but they are failing to really reflect or represent the targeted individuals they seek to acquire. After all, loyalty is, at its core, primarily something that is more relational in nature, not simply something that is only based upon purchase behavior. Given that, the best customer loyalty programs are those that focus on the people, their preferences, and ideals as a whole – not the loyalty program itself. So why are all of us still treated as part of the masses and not as individuals, especially in a market where Millennials are the new Baby Boomers and truly represent the concept of expressionism more so than past generations?

The Loyalty Program Experience

What people want- what they long for- are experiences that move them in more meaningful ways. A loyalty program that understands this builds its rewards around experiences that typically embody one or two key ideas: It is aligned with what the individual enjoys or what the person values. Give them an experience that resonates with them on one of these levels and they are yours, which is the essence of loyalty. Ignore either or both of these two things and you may still hook them for a moment – but you will not be able to reel ‘em in for the long haul.

So let’s examine an example. In my opinion, Starbucks understands these two key ideas better than most. For starters, can you count how many retailers have developed a mobile payments strategy AND incorporated a loyalty program as well? Despite the almost fanatical loyalty coffee drinkers associated with its brand, Starbucks scrapped their old pay-and-play customer rewards program for a more robust offering. First, it was free; second, it offered Starbucks customers rewards beyond the traditional free cup of coffee for every ten purchased; and third, it was multi-leveled, meaning the more the customer participated, the more varied and expansive the rewards. But better yet, Starbucks incorporates other elements that targets the individual or promotes “expressionism” through the song or app of the week, for example. Although offered to any Starbucks customer, it is also directly integrated into the mobile app and provides each “member” the opportunity to “express” his or herself by means of a download or not.

Customer Loyalty Programs in Retail

It is definitely a customer loyalty program that raises the bar considerably in the retail space in a highly competitive coffee beverage market. It also proves that, despite the number of retailers tightening the restrictions on their loyalty offerings, a well-conceived, integrated program can produce great results. And though technically Starbucks offers are not segmented or targeted, their approach in leveraging mobile technology with the incorporation of music, games, and more….makes it “feel” more personal…and thus caters to the desired “experiences” and represents common individual “values.”

With loyalty programs, success comes when the focus shifts from the programs to the relationships. With the amount of consumer data available today and the rise of technologies that can extend a program’s reach, there really is no reason not to succeed. Remember: focus on rewards that compel them to invest emotionally in your program. Do this, and you win their loyalty. And though you may be limited in truly individualized offerings, most of us are trend followers – not setters, so long as we believe it, you are in fact targeting our individual needs even if at a mass scale.

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Payments Leader

Payments Leader from FIS provides insights on credit, loyalty, fraud and emerging payments strategies through blog posts from our industry experienced authors.